When to have a PM company takeover when starting REI portfolio

Question

Hey,

I am a new REI in the Houston area. Currently, I am looking at a few deals and hoping to close on my first SFR in the next few months. As a graduate student and a full time employee with limited time, I am researching on PM companies in the Houston area. Trying to understand if having a PM company for 1-2 SFR property is needed at this early stage in my REI career. Is it better to manage a few on your own to understand how things work before you let a PM company take over? Also, If anyone has suggestions on great companies they have worked with or in general in the Houston Area, I would greatly appreciate it!

Thanks BP Community

Owen Dashner · Answer

I started out managing my own before transitioning to a PM.  I strongly recommend starting out managing your own because it is the only way to really know if your PM is doing a good job for you, and if you are getting charged the right amount for management and repairs.  The most time consuming things in property management are showings and make readies. Once a unit is leased, they are typically pretty low maintenance and you can handle several while working full-time and/or going to school.

Cody L. · Answer

When I started, I hired a property managment company as I was buying SFH out of state, and I had a very busy 9-5 job.

When I decided to get into real estate big time (well, 'big' for me back then -- buying an 8 unit) I managed it myself so I could learn.  Once I had a few hundred units I realized I was no longer an investor -- I was full time property manager.  But rather than hiring a management company, I just hired a property manager as an employee.

So for you, if you're going to have just a small group of SFH, get a management company.  But if you decide to really grow a portfolio of multi, try to manage them yourself at first to learn.  Then as that grows, turn it over (or hire people)

Jerry Ta · Answer

I may be bias, but day 1. We've helped so many clients avoid mistakes with their renovation on their first rental property. One example, that someone may not even think about it, is light bulbs. We want the whole house to have one type of light bulb only, the normal medium base bulb. How easy is it to just buy one large pack of cheap light bulbs and able to replace every light bulb in the house.

We've broken down every part of the house and know exactly what we want in the house that benefits everyone.

The other thing is, tenants, do you really want to deal with tenants?

Check us out.

Steven Ko · Answer

If you’re a grad student with a full time job, I’d hand it off. What’s more important? School/work or managing your tenants?

Cameron Tope · Answer

Hey Faraz,

While Jerry has a lot of learnings and insight, I would take the opposite approach - do it on your own for a little while and see what it's like. You'll learn A LOT about your properties and know what it takes to manage them. Then you can hire out and properly manage your property manager.

Faraz Rashid · Answer

@Owen Dashner Thank you for your response! I think for my first few properties I am going to manage them myself. Like you said it will give me a foundational background of being a PM and allow me learn and seek a PM later down the road with expectations on how I would like the properties to be managed.

@Cody L. Thanks for the response! You gave great pointers for SFH vs MFH. After learning from many individuals my goal is to get a few SFH and learn how to be a PM and then start venturing into MFH. Once I acquire multiple properties in both categories, I would then hand it over to a PM or a PM company. This would all be based on how much time I have to manage the properties

Faraz Rashid · Answer

@Jerry Ta Thank you for your response! I am weighing all options once I have acquired the properties. I do agree and see your perspective. Definitely will stay connected as I move along in purchasing process. If something does come I won't hesitate to reach out!

@Cameron Tope Thank you for your response! Yes I do not have any experience in managing a property or 2 and I would feel getting my hands dirty for a bit will allow me to learn and understand how things work. My father has just recently been furloughed due to Covid-19 and so I think with more time on his hands and his experience in RE he will be able to work with me and manage the properties. If anything changes then I will definitely reach out!

@Steven Ko Thank you for your response! Yes I have thought about that a lot as a full time grad student and W2 employee. My father will start assisting me in managing the properties once acquired and this will help leverage time.

When to have a PM company takeover when starting REI portfolio

Most Popular Reply